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Friday, July 29, 2011

The Problem Is STILL Demand

July 29th, 2011

The abysmal GDP numbers for the the first half of this year are out. One more time, here's why. From the AP:

"High gas prices and scant income gains have forced Americans to pull back sharply on spending. Consumer spending only increased 0.1 percent in the April-June quarter, the smallest gain in two years. Government spending fell for the third straight quarter."

We need solutions that address demand. Of course, the reductions in government spending are placing a terrible drag on this. In the current cup of tea, however, there is no room for more. But make no mistake, pulling hundreds of millions of dollars out of a fragile recovery is something which only makes sense to the senseless.

What might we do? We could extend the payroll tax holiday to everyone on the first $20 thousand in earnings, for a start. Or, as every economist with a clear view of our continued motion towards a full depression is arguing, we could bring back something like the WPA.

But we won't. There will be no solution to any of our economy's difficulties while the modern GOP holds the House and more than 40 seats in the Senate.


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